Beneficaries of SC quashing RBI’s bad loans circular

India's Supreme Court order against the RBI will be a huge relief for 75 borrowers with loans worth over ₹2.4 trillion

The Supreme Court's order quashing the RBI's February 12 circular will give the government discretionary power to issue direction to the apex bank for referring a defaulting company to the NCLT on case by case basis in public interest, official sources said.

As per the February 12, 2018 RBI circular, banks had to recognise even one-day default in loans of Rs 2,000 crore and above as non-performing and allow a window of 180 days to resolve the stressed accounts, failing which they had to be sent to bankruptcy courts. The plan would have required 100 percent of lenders to consent.

The power firms alleged that the central bank's notification was based on a "one-size-fits-all" approach and it does not take to account factors such as the reasons for non-payment.

However, since the RBI in June 2017 issued the names of 12 specific defaulters, including Essar Steel, Bhushan Power and JP Infra, accounting for 25 per cent of the total bad debt for resolution under the Insolvency and Bankruptcy Code (IBC), the Supreme Court order would not impact these cases nor would it impact its second list of 29 defaulters issued in August 2017.

"It is only the punitive action or coercive action under the circular which will get affected by this", the lawyer said. The circular had forced lenders to act effectively on soured loans, pushing promoters of defaulting businesses to either opt for resolution, or file for insolvency.

Under the nullified RBI circular, banks would have had to finalise a resolution plan for the airline by June if they wanted to avoid insolvency proceedings.

Pixel 2 removed from Google store
Google is rumored to be launching a less expensive, mid-range phone that's been nicknamed the Pixel 3a or Pixel 3 Lite . Furthermore, if you navigate to the URL for that now-dead Pixel 2 listing , you'll be redirected to the Pixel 3 .

"The impugned circular will have to be declared as ultra vires as a whole, and be declared to be of no effect in law", the court said in its judgment. What the Supreme Court basically said is that the powers of the RBI under Section 35AA have to be exercised in a particular manner and henceforth we have to comply with the directions of the Supreme Court in this regard and act accordingly.

It also provides a breather for companies in the sugar, shipping, infrastructure and textile sectors which were under pressure, said several bankers and lawyers. Since banks have already provisioned for likely loan losses, that process was unlikely to be reversed, a top banker with a public sector bank said.

Reserve Bank Governor Shaktikanta Das on Thursday said the central bank will soon come out with revised circular for effective resolution of stressed assets in the backdrop of the Supreme Court order.

"The circular had outlined impractical conditions and timelines for resolution and also had an inbuilt bias against the existing owners of stressed projects", APP director- general Ashok Khurana said in a statement.

State Bank of India Chairman Rajnish Kumar told a news channel that the SC's decision will not change the credit culture. The government had earlier asked the RBI to make sector-specific relaxations in the timeline for the implementation of the circular.

Related News:



Most liked

Champions League spot: Man United, Arsenal, Chelsea and Spurs involved in battle
Just work in training, score goals, and then just be happy on the pitch. [They have a] new stadium, they have top players. Manchester City manager Pep Guardiola with Riyad Mahrez and team mates at the Etihad Stadium in Manchester April 3, 2019.

Joe Biden to Make First Public Appearance Since Complaints About Behavior
Biden seemed to criticize his own party for walking away from the demographic in a nostalgia-drenched, 40-minute address. Biden on Friday said that he was not sorry for his habit of stroking and kissing women in professional settings.

ISPR releases 'proof' further contradicting Indian claim of shooting down F-16
Pakistan had categorically said that no F-16 fighter jets were used and denied that one of its planes had been downed by the IAF. There are no official figures from Pakistan on how many F-16s it has but reported estimates place the number between 70 and 80.

Google Confirms Arrival of Pixel 4 via Android Open Source Project
Today, however, a rather significant leak might be giving away some specifications for both phones, and it's all Google's fault. Whilst Android and Google couple of weeks ago disclosed Android Q , its next big OS version coming to smartphones later 2019.

Prince Harry and Meghan Markle launch official joint Instagram account
The couple has just launched a joint Instagram account , sparking fevered speculation that a big announcement is on the way. After the duke and duchess Wednesday last May, they moved into Nottingham Cottage at Kensington Palace .

Amazon boss Jeff Bezos finalises divorce
Based on Thursday's share price, MacKenzie Bezos's stake in Amazon alone is worth $36 billion US. They married just six months after they began dating, Jeff Bezos has said.

Pep Guardiola says pressure will bring out best in Manchester City players
The 26-year-old is tied on 17 goals with teammate Sadio Mane, Harry Kane and Pierre-Emerick Aubameyang. We're maybe going to get a wee bit exposed at the back but there's nobody better to deal with it.

Police, FBI trying to verify teen is boy missing since 2011
The teen said he had "been kidnapped and he's been traded through all these people and he just wanted to go home", Night said. Authorities say a teenager found wandering in Kentucky identified himself to police as Timmothy Pitzen , who went missing...

Black boxes reveal Ethiopia plane's last moments before Boeing 737 Max crashed
Boeing announced on Wednesday that it had developed software updates to "prevent erroneous data from causing MCAS activation". Both pilots in the Ethiopian Airlines crash underwent additional training following the Lion Air incident.

Turkey slams US as having 'no clear strategy' on Syria
Turkey has engaged with USA negotiators in recent days about buying the Patriot system, a person familiar with the matter said on condition of anonymity.

Joaquin Phoenix's 'Joker' Trailer Reveals Brian Tyree Henry
He appears in the teaser at the 1:47 mark, with Arthur Fleck (Phoenix) putting a smile on his face. Ever since hearing that Joaquin Phoenix was on board I was pretty interested.

Mick Schumacher makes F1 testing debut with Ferrari
Schumacher said he found Ferrari's 2019 vehicle "incredible because of the power it has but it is also smooth to drive". The vehicle has more grip, the auto is less draggy on the straights, the engine is a big step better as well.

Harry and Meghan take the crown for Instagram record
The implication is clear - they'll be using one of the most popular social media platforms in the world to spread their message. It took him 11 hours and 36 minutes to set the record, more than double the amount of time it took the Duke and Duchess.

Ariana Grande Addresses Her Sexuality After 'Monopoly' Lyrics Stir Up Conversation
Fans are also taking to Twitter to call out those who dragged Ariana Grande for headlining Manchester Pride . Watch the music video here and download the song on iTunes ! Another fan asked, "Are [you] bisexual ma'am".

AAF suspending operations 8 games into season
The Alliance of American Football , which has played just eight weeks of games in its inaugural season, is suspending operations. One of the more attractive things about the league was the technology it developed with its app. "Unfortunately, Mr.